SHRIPISTON.NS WACC - Weighted Average Cost of Capital

The WACC of Shriram Pistons & Rings Ltd (SHRIPISTON.NS) is 17.8%.

The Cost of Equity of Shriram Pistons & Rings Ltd (SHRIPISTON.NS) is 18.15%.

The Cost of Debt of Shriram Pistons & Rings Ltd (SHRIPISTON.NS) is 10.30%.

	Range	Selected
Cost of equity	16.70% - 19.60%	18.15%
Tax rate	25.20% - 25.40%	25.30%
Cost of debt	7.00% - 13.60%	10.30%
WACC	16.4% - 19.3%	17.8%

WACC

SHRIPISTON.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.19	1.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.70%	19.60%

Tax rate	25.20%	25.40%
Debt/Equity ratio	0.03	0.03
Cost of debt	7.00%	13.60%

After-tax WACC	16.4%	19.3%


Selected WACC	17.8%

SHRIPISTON.NS's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for SHRIPISTON.NS:

cost_of_equity (18.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.19) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.